Development
$135 million to $150 million
Spanning across 15 states and one Canadian province allows the Midwest ISO to look at high voltage transmission system needs from a "big picture" perspective. With this view, we focus on identifying solutions that benefit the entire region and maximize the value of the system.
A Look Behind the Calculation
In order to ensure that energy demand does not outgrow the generation assets available to serve it, a certain amount of generation capacity is typically required to be constructed in advance of the need for that additional capacity to serve load. This additional capacity mitigates risks associated with rapid usage growth and with unforeseen long-term generation outages. This excess capacity is referred to as planning reserves. Typically, planning reserve margins in the Midwest are fifteen percent.
The Midwest ISO's market-based method for managing congestion across the region allows our customers to develop integrated resource plans based on a slightly lower level of planning reserves than if each member planned their system independently. Lower planning reserves translate into the construction of fewer new electric generating resources in the future. This in turn reduces the capital cost for new generation to be recovered from end use customers.
Each megawatt of new generation deferred or eliminated due to the need to carry fewer planning reserves translates into a savings of $1.2 million in avoided construction costs. Over time assuming just a 1 percent to 1.25 percent reduction in planning reserve margin translates into annual benefits of $135 million to $150 million for our stakeholders.
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